Amazon Set to Launch Smartphone in Mid-2013 - Report.

The launch of own-brand smartphone model from Amazon, the world’s largest online store, is reportedly delayed to mid-2013 from late 2012. The reasons are unclear, but it is reported that the mass production has either started or is about to start. In any way, Amazon will need to thoroughly concentrate on software to be competitive with other brands on the market.

Citing smartphone parts makers involved in the supply of Amazon’s new smartphone model, China Economic News Service reports that the company intends to release its new product (which might be called Kindle Air, for example) between the second quarter and the third quarter of 2013, in mid-2013, which should coincide with the E3 video game trade-show in Los Angeles in June, 2013. The device will reportedly be available at $100 - $200 price-points, which signals Amazon’s intention to subsidize the hardware costs.

Foxconn, which is reportedly contracted to manufacture the product, is projected to ship as many as five million units of Kindle-branded smartphones, which is a lot for a new player on the market, but hardly enough to fulfill the demand if it explodes.

Earlier it was reported that Amazon planned to release its smartphone before this year’s holiday season. It is evident that the company will not release a new product before the end of 2012.

In fact, for Amazon, it is not critical to announce its smartphone as soon as possible. What the company needs is to develop is a competitive handset that will be valuable when compared to leading edge devices from Apple and Samsung. Therefore, a delay, if there actually was one, has barely hurt Amazon. Obviously, with no Kindle smartphone this holiday season, the Android and iOS platforms will get tens of millions of new customers. Still, from a platform holder perspective, Amazon is selling Kindle Fire tablets, which is driving the awareness of the platform, something that may indeed be crucial for the company before it launches on a very competitive smartphone market.

Amazon has been cherry-picking patents on wireless technologies with the help of leading patent specialists in order to avoid patent wars with other players, such as Apple, Nokia and others. Such a cautious approach points to the fact that Amazon considers its smartphone seriously and probably wants to equip it with technologies that will either change the market or will affect it so seriously that the competitors would try to halt its sales. The approaches to Kindle and Kindle Fire were different.

Smartphone will be a logical addition to Amazon's existing gadget lineup that includes a 7" tablet as well as a family of e-book readers. Since Amazon does not need to make money on the device itself and will likely impose rather strict limitations in order to enforce customers to buy content or programs only from Amazon and thus maximize the company's profits. Still, thanks to those restrictions, the product will likely be very inexpensive.

While the viability of a smartphone for Amazon is clear, its success on the markets different from the U.S. is not cast on stone to say at least. If Apple iPhone can be considered as a closed platform, then Amazon's Kindle is extremely closed and limited. Apple allows third-party content purchasing systems (including those from Amazon and B&N) to be installed onto iOS-based devices, Google allows multiple app stores, but Amazon wants to completely seal the Kindle platform and lock customers on its own services and app store despite of the fact that Fire tablet uses modified Android operating system. While such "absolutely sealed" approach may work on a media tablet, it may not work on a smartphone.